Brave New World of Fundraising and Social Media

Brave New World of Fundraising and Social Media

How do you raise $100 Million dollars in 6 months? Get a few thousand people to challenge each other to pour buckets of ice water over their heads, video tape themselves doing it, and post it on social media websites using #ALSiceBucketChallenge. Easy right? No one expected the ice bucket challenge to take off so stupendously and you can’t always know what project or endeavor is going to be a grand slam home run. However, we are truly in an era where social media is the easiest form of communication and charities must embrace the power of individual fundraising through this medium. Whether it is for the ALS Ice Bucket Challenge, the local fun run or the PTA Read-a-thon, individual fundraising is on the rise and people are using their social media accounts and email contacts to solicit donations for their favorite charities. Charities, looking for alternative ways to fundraise, and individuals, fundraising on behalf of their favorite charities, use crowdfunding or online fundraising sites such as GoFundMe, Indiegogo, Crowdrise, Fundly, and others. How does online fundraising for or on behalf of charities work? The first and most important step is that the charity selects the online service provider it wants to work with, such as GoFundMe or Indiegogo.  These unregulated sites act as agents for charities and distribute information to the public about the fundraising goals of the charity. Once a charity establishes a relationship with a crowd funding site, an individual can set up an account with the site and fundraise on behalf of the charitable organization. There are a number of online fundraising sites so charities...
Uniform Guidance: The De Minimis Indirect Cost Rate

Uniform Guidance: The De Minimis Indirect Cost Rate

The lack of indirect cost recovery from Federal grants is nothing new for Not-for Profits (NFPs). This has been especially true for those NFPs who do not have a federally negotiated indirect cost rate, as they receive all, or predominant amounts, of Federal grants from pass-through entities. The Office of Management and Budget’s (OMB) Uniform Guidance now recognizes that NFPs do indeed incur indirect costs and has made available use of the de minimis rate. In accordance with 2 CFR 200.414(f), NFPs who have not received a negotiated indirect cost rate previously can now utilize the de minimis rate.   The Calculation The de minimis rate can be charged at 10% of Modified Total Direct Costs (MTDC). MTDC is defined at 2 CFR 200.68 as being: “all direct salaries and wages, applicable fringe benefits, materials and supplies, services, travel, and up to the first $25,000 of each subaward (regardless of the period of performance of the subawards under the award). MTDC excludes equipment, capital expenditures, charges for patient care, rental costs, tuition remission, scholarships and fellowships, participant support costs and the portion of each subaward in excess of $25,000.” The first $25,000 of subawards can be taken when each subaward is initially issued, separately negotiated, or renegotiated over the Federal grant’s period of performance (i.e. not $25,000 for each entity’s fiscal year). Some NFPs have found it helpful to have two separate subaward general ledger accounts: one account that tracks the first $25,000 of subawards and another account that records costs in excess of the first $25,000. The NFP will want to ensure that direct costs of the Federal...
5 Key Things to Know about the New Revenue Recognition Standard

5 Key Things to Know about the New Revenue Recognition Standard

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers. This standard will impact all entities that have contracts with customers, including not-for-profits. Many not-for-profit organizations are unsure how this new standard will impact them. Those concerns include which revenue sources the standard applies to, how to apply the standard, and when the standard will take effect. Below are five key things to know about the new Revenue Recognition Standard. 1. Converges with International Accounting Standards – The new standard is the result of a convergence with FASB and the International Accounting Standards Board (IASB) and took the two standard setting bodies over ten years to complete. The end result is the removal of numerous inconsistencies between the FASB and IASB revenue recognition standards. 2. Principle-Based Focus – One of the biggest changes is the move from rules-based accounting to a principle-based focus. Currently, there are over 200 industry-specific revenue recognition standards in the United States. Most of those rules-based standards will be gone once this new standard comes into effect. The core principle of the new standard focuses on the contract between the organization and its customers for the provision of goods or services, and more specifically, the rights and obligations between the two parties. 3. Follows a 5-Step Recognition Process – The new standard provides a 5-step process to recognize revenue. This includes (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and...
Quick and Inexpensive Fraud Testing Procedures

Quick and Inexpensive Fraud Testing Procedures

We live in a world where time and resources are at a premium. As a result, some responsibilities get pushed to the “back burner.” However, we also live in a world where the possibility for employee fraud is real, but the process to uncover such fraud could be difficult and time consuming. One way to get some high quality return on time investment is by using simple Excel functions. As auditors, we’ve had the privilege of being involved in thorough data mining projects designed to detect fraudulent activity. During these projects, data mining software is used to perform a suite of complex tests that can comb through significant amounts of data and summarize it to obtain leads related to suspicious activity. This software can produce amazing results; however, owning this type of software can be expensive and it takes time to learn the more difficult tests. Luckily, as long as you have the ability to export certain data to Excel, then you will be able to perform the following Excel functions in seconds and the results only require minor follow-up. These tests will never replace data mining or other internal audit procedures that your organization is already doing, but if you don’t have any internal audit procedures in place, the following steps would be a good place to start: Non-Payroll Check Register • Subtotal vendor checks by count and dollar amounts o You might find that a vendor you should be paying monthly is getting paid more often. o Look for vendors that you are unfamiliar with but are getting paid substantial amounts of money. • Checks on weekend...
So You Have an Internal Control Letter. Now What?

So You Have an Internal Control Letter. Now What?

If you are part of organization that is audited or have been involved in audits with a prior organization, you understand that audits can cause a significant amount of stress and anxiety. This is especially true when there are audit adjustments or other deficiencies identified and an internal control letter is issued to the governing board. It’s no surprise that these letters can cause some strain on the relationship between the client and the auditor. First, what is the purpose of the letter? Auditors are required by professional standards to report, in writing, internal control matters that they believe should be brought to the attention of those charged with governance (the board). Generally, if your auditor is going to put an internal control matter in a letter, they have assessed that the matter was the result of a deficiency in internal controls. This is an important part of that audit that the profession does not take likely. Auditors spend a lot of time assessing how material audit adjustments and immaterial adjustments that have the potential to be material will be communicated in the internal control letter. Even if no adjustments are identified during the audit, a letter could be issued in the event that there is a significant recommendation the auditors would like to make, which may include enhancing internal controls, additional training for employees, system improvements or even governance recommendations. As noted above, internal control letters are usually the result of a deficiency in internal controls discovered during the audit, mostly commonly from a material audit adjustment. These letters include required language regarding the severity of the deficiency....
OMB Uniform Guidance Implementation “Top 10” Changes

OMB Uniform Guidance Implementation “Top 10” Changes

By now we are familiar with the OMB Uniform Guidance for federal awards, but how much do we know about its effect on non-profits and other non-federal organizations from a practical sense, and what should we be doing now to prepare for its implementation? What should we have already done? Background Recall that on December 26, 2013, the Office of Management and Budget (OMB) issued its Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, (Uniform Guidance, or UG) that combined eight OMB Circulars into one comprehensive, uniform set of regulations. Federal agencies had until June 2014 to develop and submit to the OMB their own agency-specific plans for implementation of the UG. The UG, along with the federal agencies’ guidance, became effective for all new federal awards and incremental funding of existing awards after December 26, 2014, without much fanfare or excitement. What Now? Many organizations are struggling to find an easy way to determine how the UG will affect them and what changes their organizations need to make to comply with the UG. With detailed regulations from eight previous OMB Circulars combined into one body of regulations, this is no easy task. Because the UG applies to a broad spectrum of federal and non-federal entities with vastly varying operations and funding, it is difficult to compile a digestible, comprehensive summary of the changes that apply to all entities. Therefore, management will need to determine the areas that most affect their organizations and study those sections of the UG in detail. To help you identify those areas, we have compiled a “Top 10” list of the...